While Net trading will only be a substitute to trading through telephone and fax, it would still lead to unprecedented changes, according to DR Mehta, chairman of Securities and Exchange Board of India.

When asked whether Internet would make Bolt (and other similar) terminals redundant, the Sebi chief replied that it was difficult to say, but that it would lead to widespread changes - sending a signal to exchanges that they should be prepared for a new, unchartered role.

According to Atul Pradhan, executive director in KPMG India Pvt Ltd, actual e-trading will change the way brokers conduct their business - "they will shift to an advisory role," he said. Gurunath Mudkapur of Khandwala Securities said that brokers will have to do value-addition to their services.

Brokers will have to set up adequate research and analysis centres which would give clients the information they want and based on which they can undertake trading, says Foram Kohli of of Motilal Oswal Securities which already has a full fledged, R&D set-up in place in readiness for Internet trade.

The industry feels that clients might prefer to approach large and established broking houses, which would offer an entire gamut of services - such as market information and investment tools, updates on quotes, market summaries, analyst reports, trading strategies, access to portfolio management tools, account information and so on.

Brokers, it is felt, would adapt themselves to the changing scenario and accordingly make their services available. Some small-time brokers might be deterred by making the necessary investments for the required network but the prevalent feeling is that there will not really be a large-scale shakeout in the sector.

According to Raghunath, "it will be the same as it is now - some brokers who will make more money and others less, some will be good and others not so good, only there will be a dimensional shift in their operations.

Internet trading is expected to increase the number of trades per broker - reducing cost of transactions, while clients will have a wider broker choice. In simple terms, the execution capability will now shift from the broker to the client due to which brokers will get the ability to cater to a wide spectrum of services from commoditization to niche services.

The Bombay Stock Exchange has made some forecasts on Net trading - "Internet traffic is doubling every 100th day and the expected traffic in the year 2005 is one billion users," and "The trend in the securities industry is also unprecedented. In 1996, there were 1.5 million online brokerage accounts and the assets managed by these were about $100 billion.

These grew by 100 per cent to 3 million accounts in the year 1997 and the assets managed grew to $150 billion. In 1998, the number of online accounts were six million. It is expected that in the year 2002, there will be 14 million online brokerage accounts and the assets managed by them will grow to $700 billion."

Sebi has permitted Net trading in a limited way under order routing system (ORS) through registered stock brokers on behalf of clients for execution of trades on recognised stock exchanges - that is, investors can place buy/sell orders on brokers through the Net. In the second stage, clients can directly trade online with settlement and clearing taking place online. However, clients would still have to go through brokers' web sites.

The second stage will take longer as very few banks offer Internet services while depositories have not yet gone online. Sebi itself has admitted in its first report "because of this interfacing securities trading with banking and depository services may take longer."